Marketing's Three Legged Stool

Hotel Marketing in the 21st Century

By Bonnie Knutson Professor, The School of Hospitality Business/MSU | September 04, 2016

So you clicked on this website link and are starting to read. Okay. That's good. But before reading further, let me ask you a question. Just what is marketing in the lodging industry today? Hotel managers talk about it. Sales teams agonize over it. And strategic consultants have a plan for it. But just what is it? If you were to ask a thousand different people to define hotel marketing, you'll undoubtedly get a thousand different answers. One General Manager might say, "Oh that's easy, it's keeping heads on all my beds with a waiting list out the door." A Banquet Manager might reply, "Well, it's planning and promoting our special promotions and special events." A member of your loyalty program might answer, "It's the email offers I get every month." And a college student, majoring in hospitality management, might give the American Marketing Association's (AMA) definition that he or she had to memorize for some course: "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." So which one is right? This question becomes progressively more important in today's – and tomorrow's – increasingly competitive global hotel environment.

Just for fun, when starting to write this article, I googled (remember when Google was a noun?) the phrase, hotel marketing strategy and got 2,990,000 hits. When I rephrased and typed in hotel marketing ideas, the number jumped to 42,000,000. Making my search a little more generic, I eliminated the word private and just used marketing for clubs. The resulting amount more than tripled, giving me 40,700,000 possibilities. And when I just used hotel marketing, I was overwhelmed by 175 million websites. Yikes! No wonder many in the lodging industry think marketing to sophisticated, knowledgeable, demanding, and ever-changing consumers and guests is challenging. And they're not even counting those prospective guests who are targets for a virtually every promotional campaign.

This article is designed to help anyone in the hotel industry answer the challenge of hotel marketing in the 21st Century. It is built on my belief [1] that marketers have overly complicated the marketing process, [2] that marketing is dynamic, constantly evolving to meet the changing needs, wants, and expectations of people and organizations, and [3] that the reasoning behind the AMA's newly revised definition is right on target. As Nancy Costopulos, Chief Marketing officer of the AMA said in a 2008 press release, "One of the most important changes to [the] American Marketing Association's new definition for marketing is that marketing is presented as a broader activity…Marketing is no longer a function – it is an educational process." The key phrase is educational process.

If you have ever attended one of my seminars or read an article I've written, you know that I like to use metaphors to help my audience better understand the point being made. I do the same in this piece. Throughout, I draw on images, quotations, stories, and even some Hollywood movies as visualization tools. I take examples from other industries and show how the hotel industry can learn from them. And, hopefully, I give you some new ways of thinking and doing which will make your marketing efforts more effective.

So here goes.

This piece is organized around the concept of a milk stool. For anyone who grew up in an agricultural setting (no, I didn't) and had an opportunity to milk a cow (yes, I did), you know that the three-legged design of a milk stool makes it a stable and strong place to sit. If any one of the legs is too long or too short, the stool can fall over. But if the three legs are all equal, the stool doesn't wobble or tip, even on uneven ground. It is much the same in hotel marketing. To milk the most out of your brand's marketing efforts, each of the legs must be equally strong. Think of the first stool leg as representing your guests and prospective guests. I labeled this leg Identify Demand. The second leg symbolizes Influencing Demand, encompassing guiding principles that support a new perspective of communicating. Leg three denotes Servicing Demand and takes you away from the old notion that marketing and operations are separate functions. The seat of this hypothetical marketing stool symbolizes the measurable results of your efforts, while the uneven ground embodies the unsteady business environment in which hotels compete. If any of your brand's three legs are too long or too short, its marketing endeavors won't be stable in the ever-changing hotel setting and your marketing can topple over.

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This week's Top Pick...

Knowland CEO Robert Post responds to recent articles/opinions that the $50 million investment by Marriott, IHG, Accor, and Hilton in a new Group Booking Platform has signaled "meaningful change" in the painful process of selling event space and room blocks to meeting planners. The new booking platform uses a self-reporting database of hotel group block inventory and meeting space to offer meeting planners an OTA-like environment to shop and book event venues at the lowest price. Read on...

Revenue Management: Focus On Profit

Revenue Management is still a relatively new profession within hotel operations and as such, it continues to evolve. One significant trend in this area is a shift away from using revenue as the foundation to generate key performance indicators (KPIs) and to instead place the emphasis on profit. Traditionally, revenue managers have relied on total revenue per available room (TrevPAR) and revenue per available room (RevPAR) as the basis of their KPIs. Now, some revenue managers are using gross operating profit per available room (GOPPAR) as their primary KPI. This puts profit at the center of revenue management strategy, and managers are increasingly searching for new ways to increase the profitability of their hotels. Return on Investment is the objective of any hotel investment, so it is only logical that profitability and ROI will be emphasized going forward. Another trend is an expanded focus on direct hotel bookings. Revenue managers know that one way to increase profitability is to steer guests away from online travel agencies (OTAs) and book directly with the hotel. This tactic also reinforces brand identity and loyalty, and encourages repeat business. In addition, it provides a valuable platform to market the hotel directly to the customer, and to upsell room upgrades or other services to them. Another trend for revenue managers involves automation in their software programs. Revenue management systems with automation are far more desirable than those without it. Automating data entry and logistics increases efficiency, allowing managers to spend more time on formulating strategy. As a bonus, an automated system helps with aggregating and interpreting data. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.